This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Explain what effect an increase in the future expected interest rate will have on the IS curve and ... (Read 32 times)

mp14

  • Hero Member
  • *****
  • Posts: 534
on: Jun 30, 2018
Explain what effect an increase in the future expected interest rate will have on the IS curve and LM curve in the current period.
 
  What will be an ideal response?

Question 2

Securitization is a process of asset transformation that involves a number of different financial institutions working together. These financial institutions are known collectively as the
 
  A) transformers.
  B) amalgamation.
  C) movers and shakers.
  D) shadow banking system.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

gstein359

  • Sr. Member
  • ****
  • Posts: 293
Reply #1 on: Jun 30, 2018
Answer to Question 1

An increase in the future expected interest rate will cause a reduction in the present value of future disposable income and, therefore, human wealth. This causes current C to decrease and the IS curve to shift left. The increase in the future expected rate will also cause a reduction in the present value of future profits. This will cause a reduction in investment and another leftward shift in the IS curve. The LM curve will not be affected.

Answer to Question 2

D


mp14

  • Member
  • Posts: 534
Reply 2 on: Jun 30, 2018
Thanks for the timely response, appreciate it

aliotak

  • Member
  • Posts: 326
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

« previous next »
 

Did you know?

The eye muscles are the most active muscles in the whole body. The external muscles that move the eyes are the strongest muscles in the human body for the job they have to do. They are 100 times more powerful than they need to be.

Did you know?

Anesthesia awareness is a potentially disturbing adverse effect wherein patients who have been paralyzed with muscle relaxants may awaken. They may be aware of their surroundings but unable to communicate or move. Neurologic monitoring equipment that helps to more closely check the patient's anesthesia stages is now available to avoid the occurrence of anesthesia awareness.

Did you know?

Methicillin-resistant Staphylococcus aureus or MRSA was discovered in 1961 in the United Kingdom. It if often referred to as a superbug. MRSA infections cause more deaths in the United States every year than AIDS.

Methicilli ...
Did you know?

If you use artificial sweeteners, such as cyclamates, your eyes may be more sensitive to light. Other factors that will make your eyes more sensitive to light include use of antibiotics, oral contraceptives, hypertension medications, diuretics, and antidiabetic medications.

Did you know?

By definition, when a medication is administered intravenously, its bioavailability is 100%.

The greenhouse effect. The greenhouse effect.
Table 6.1 illustrates the main regime types and their differences. It breaks the regimes into four Table 6.1 illustrates the main regime types and their differences. It breaks the regimes into four
How would you rate your overall health?” The percent of adults answering “excellent” or ... How would you rate your overall health?” The percent of adults answering “excellent” or ...
A typical camshaft-driven high-pressure pump used to increase fuel pressure to 2,000 PSI or higher. A typical camshaft-driven high-pressure pump used to increase fuel pressure to 2,000 PSI or higher.
Effect of Productivity Improvement in the Malthusian Model Effect of Productivity Improvement in the Malthusian Model
Social scientists have not done well at devising theories to explain lovely romantic moments Social scientists have not done well at devising theories to explain lovely romantic moments
Video: Fermentation - When Oxygen Is Absent, Pyruvate to Lactate & Pyruvate to Ethanol

For a complete list of videos, visit our video library